Interim Report for First Quarter 2015

First quarter 2015

  • The quarter began with weak order intake, which gradually improved. Order intake was 10 percent lower than in the strong first quarter of 2014
  • Sales volumes were impacted by the weak order intake at the end of last year and decreased by 8 percent compared with the first quarter of 2014. An improved sales mix limited the decrease in revenue to 7 percent
  • Operating profit before depreciation and amortisation (EBITDA) amounted to EUR 27 (30) million and operating profit (EBIT) amounted to EUR 17 (18) million
  • Cash flows from operating activities amounted to EUR -5 (5) million
  • Steel and metals distributor Ovako Metals Oy Ab (formerly Tibnor Oy) in Finland was acquired on March 31 which has lead to a 3 MEUR positive one-off effect on operating profit

Amounts in brackets in this report refer to the corresponding period in the previous year.

Group key figures

2015Q1 2014Q1 2014Full year
Sales volumes kton 188 204 697
Net revenue EURm 229 246 862
Operating profit before depreciation (EBITDA) EURm 27 30 69
EBITDA margin % 11.7% 12.2 % 7.9 %
Operating profit (EBIT) EURm 17 18 15
EBIT margin % 7.2 % 7.3 % 1.7 %
Net profit/loss EURm 8 8 -15
Earnings per share EUR 149 162 -302
Cash flow from operating activities EURm -5 5 66
Net debt/equity ratio % 158 % 141 % 152 %
Return on capital employed (ROCE) % 3 % 4 % 3 %
Full time employees at end of period (FTE) No. 2,981 2,973 2,925


Comments from the CEO

”The first quarter showed a significant recovery after a weak ending in 2014. The order intake was weak in the beginning of the quarter and improved gradually. Compared to the strong first quarter last year, volumes were down with 8 percent. Low industrial production in Sweden during the first quarter and weaknesses in some volume segments in Germany are two of the main reasons for the variation.

Despite the lower volumes, the operating result was on a similar level compared to the strong first quarter last year. Demand in advanced applications for renewable energy and fuel injection systems was strong in the quarter, affecting the mix in a positive way. That together with a good cost control, and an improved exchange rate balanced out most of the negative volume effects. Contribution margin per ton remained strong and stable.

The acquisition of Tibnor Oy in Finland was completed on March 31. The company, a leading distributor in Finland, is now named Ovako Metals Oy Ab. Both cash flow and EBITDA are expected to be positively affected during the rest of 2015. However, the EBITDA margin for the group will be somewhat negatively affected by the lower margins in the distribution business.

During the quarter the SZ-Steel® brand for cold climate applications was launched. Ovako has during the last two years completed the introduction of our customer offer in terms of properties. The offering includes IQ- and BQ-Steel® for improved fatigue properties, WR-Steel® for wear resistant properties, M-Steel® for improved machining properties, and finally SZ-Steel for predictable performance down to minus 101 degrees.

Short-term outlook

The demand is expected to remain stable compared to the first quarter this year and also compared to the second quarter last year.”

Tom Erixon
President and CEO

Stockholm, April 28, 2015

You will find the Report for First Quarter 2015 on the website:

http://www.ovako.com/Financial-information/

Further information can be obtained from:
Viktoria Karsberg, Head of Group Communications,  +46 70 209 93 96

Ovako is a leading European producer of engineering steel for customers in the bearing, transportation and manufacturing industries. Our production is based on recycled steel and includes steel in the form of bars, tubes, rings and pre-components. Ovako is represented in more than 30 countries and has sales offices in Europe, North America and Asia. Sales in 2014 amounted to EUR 862 million and the company had 2,925 employees at year-end. For further information please visit us at www.ovako.com

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About Us

Ovako develops high-tech steel solutions for, and in cooperation with, its customers in the bearing, transport and manufacturing industries. Our steel makes our customers’ end products more resilient and extends their useful life, ultimately resulting in smarter, more energy-efficient and more environmentally-friendly products. Our production is based on recycled scrap and includes steel in the form of bar, tube, ring and pre-components. Ovako is represented in more than 30 countries and has sales offices in Europe, North America and Asia. Ovako’s sales in 2016 amounted to EUR 781 million and the company had 2,800 employees at year-end. For more information, please visit us at: www.ovako.com. Press images please go to:http://mediabank.ovako.com/search/images

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Quotes

The first quarter showed a significant recovery after a weak ending in 2014.
Tom Erixon